E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
When it's Monday and Christmas is Tuesday, will you know where your holiday orders are?
At Express, the multichannel retailer of apparel for 20-somethings, being fashion-forward means more than just offering what CEO Michael Weiss calls innovative interpretations of unique apparel and accessories sourced from throughout the world. It also means taking on extra expense if necessary to deliver its fashions in time for Christmas and other popular holidays.
"We focus on our fulfillment policies and we're proud to have a very strong repeat customer rate and strong customer satisfaction scores that have grown every year since our site launched in 2008," says Jason LaRose, senior vice president of e-commerce. "There is a strong relationship between our operational excellence in fulfillment and overall customer satisfaction and sales."
One extra step Express will take is covering the additional cost of upgrading customer orders to air shipments to ensure delivery by Christmas or other major holidays. Because while it always tries to push the last-order time for guaranteed deliveries as late in the calendar as possible—last year it was 2 p.m. Eastern time on Wednesday, Dec. 21, when Christmas fell on Sunday—it also doesn't want any shipping-cost-conscious customers to miss out on a great gift-giving experience just because they were tardy in placing their order, LaRose says.
"To meet guarantees, we upgrade customer orders on those last days before the holiday—at our expense—so no gifts are held up logistically," he says. Last year, that policy enabled Express.com to guarantee Christmas delivery of orders received on Dec. 21 even though carriers would guarantee standard rate ground shipping only for orders received by Dec. 19.
Not all retailers are so generous, but all face increasing competition on holiday delivery, especially from Amazon.com Inc. and others that offer free or low-cost shipping on many items to many consumers. To stay in the game, web merchants are pressed to be as efficient as well as fast as possible. And that takes the right mixture of order management and fulfillment technology and practices, and the flexibility to adjust when business picks up unexpectedly.
In and out—quickly
At the most basic level, getting online orders to expectant holiday shoppers in time requires retailers to take two crucial steps: forwarding orders as fast as possible to the fulfillment center, and making sure the fulfillment center turns those orders over as fast as possible to a shipping carrier.
Accurate projections are an important part of the picture. They help retailers staff their warehouses accurately and permit providers of outsourced fulfillment services and carriers to plan for order spikes, says Ayal Latz, president of a2b Fulfillment Inc., a third-party logistics provider that manages retailers' inventory in its own warehouses.
Even if it can push high volumes of holiday orders at lightning speed through a fulfillment center a retailer could still hit a crippling speed bump if the distribution center at the United States Postal Service or another shipping carrier isn't prepared to handle an unexpectedly high volume of packages.
"When the fourth quarter comes around, a retailer might go from 100 Priority Mail packages a day to 5,000 a day," says Patrick Kelley, executive vice president of OSM Worldwide, a company that forwards retail shipments to the Postal Service. "But if a local post office facility is not ready for that, it might overwhelm that facility."
Retailers have several options for managing fulfillment, including handling everything internally or through outsourcing arrangements for all or some of their shipments. Whiteflash.com, a web-only retailer of diamonds and other jewelry items, whose average order value is more than $5,300, chooses to fulfill all its orders in-house for maximum control of its inventory, says e-commerce director Ashley Bailey. Relying on another company to hold and ship products like diamonds would run the risk that customers could receive damaged or faulty items not worth their high price tags. "One has to see the diamonds to be able to back the quality performance of the diamonds," she says.
To help manage the peaks and valleys of order volume, and to be prepared with sufficient fulfillment staff, Whiteflash relies on home-grown software that forecasts sales and analyzes web site traffic.
Based in Houston, the jewelry retailer typically will accept orders as late as 3 p.m. Central time to ship them out the same day, in which case most orders will take two or three days to arrive at the recipient's address. That's good enough for much of the year. "Most guys will wait two or three days to receive their engagement ring," Bailey says.
But for special occasions like Christmas, Whiteflash customers are more likely to get caught in a time crunch—in which case the retailer will staff its fulfillment center for longer hours. "Our folks are prepared to work as late as needed to make sure we can make a memorable Christmas for our clients," Bailey says.
Taking it outside
Other retailers prefer to outsource their fulfillment to third-party logistics providers set up to quickly receive online orders and ship from strategically placed warehouses.
ArmorMount LLC, a Long Island, N.Y.-based web-only retailer of equipment for mounting flat-panel TVs to walls, transfers orders from its e-commerce site, ArmorMount.com, to its fulfillment provider, Shipwire Inc. ArmorMount uses e-commerce technology hosted by Shopify Inc. to transfer orders to one of three Shipwire fulfillment warehouses—in Los Angeles, Chicago and Philadelphia—enabling ArmorMount to deliver to nearly all U.S. addresses within two days, mostly by ground services.
"Because Shipwire allows us to store our goods on both coasts, we can rely on UPS ground shipping up to just a few days before major holidays," says the retailer's founder, David Wurtz. "We also sell this as a big feature throughout the year: two- to three-day delivery timeframes, anywhere in the continental United States."
Shipwire guarantees that all orders received in its warehouses by 5:30 a.m. local time will ship out the same day; for an extra fee of $1 per order, it will ship out the same day orders received by 10:30 a.m., and for an extra fee of $2.50 per order, will ship out the same day orders received by 1:30 p.m.